NewsRussian oil tankers under threat: Houthi attacks could trigger global supply crisis

Russian oil tankers under threat: Houthi attacks could trigger global supply crisis

Huti - a Yemeni movement of political and military nature. Their motto: "God is great, death to America, death to Israel, curse on the Jews, victory to Islam."
Huti - a Yemeni movement of political and military nature. Their motto: "God is great, death to America, death to Israel, curse on the Jews, victory to Islam."
Images source: © Google Images | 2024 Mohammed Hamoud

8:45 AM EST, January 28, 2024, updated: 4:44 AM EST, March 7, 2024

A missile attack on a British tanker transporting Russian fuel through the Gulf of Aden on Friday could be a turning point for the oil market. The market has been fairly immune to Houthi attacks so far, says Bloomberg.

Bloomberg clarifies that a significant portion of oil flowing through the Red Sea and the Suez Canal originates from Russia. According to Houthi fighters, who are disrupting transport through the Red Sea because of the Gaza war, safety was expected. Russian ships should have no concerns as Moscow is an ally of their patron, Iran.

Growing sense of crisis in global oil market

Thus far, tankers carrying Russian crude oil have largely been unaffected. Initially, the Houthis targeted Israeli assets due to the Gaza war. However, they expanded their scope to American and British ships after these countries initiated airstrikes in Yemen.

According to Bloomberg, the attack on Friday implies that a large fraction of the three million barrels of Russian crude oil and fuel, transported daily via the Red Sea to Asian customers, may be at risk. Despite sanctions imposed on Russia over the Ukraine war, Russian volumes are vital to the global market.

As oil prices increased by around 2 dollars on Friday, traders are expected to reassess the situation come Monday after the weekend.

Forecasting possibilities

As per Bloomberg, it's unlikely for the transit through the Red Sea - concerning both general trade and the flow of crude oil specifically - to be totally halted.

The call on this issue will primarily rely on four factors: the willingness of the owner, the determination of the crew and charter, as well as the potential profit. Trade will endure as long as the price balance maintains, given eager shipowners and a crew ready to undertake the risk for additional earnings. Increased insurance costs could possibly deter potential shipowners.

For the tankers carrying Russian oil that are reluctant to sail through the Red Sea, this is a potential concern for Moscow and a possible supply issue for the global oil market.

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